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Immigration overhaul could boost U.S. states’ revenue

Immigrants stand for the invocation during a naturalization ceremony to become new U.S. citizens at Boston College in Chestnut Hill, Massachusetts March 21, 2013. Photo: Reuters/Brian Snyder

WASHINGTON (Reuters) – Granting citizenship to 11 million undocumented immigrants in the United States could boost state and local government coffers by about $2 billion annually, said a liberal-leaning think tank study released on Wednesday.

The findings come as the House of Representatives debates the move as part of a revamp of immigration law after last month’s U.S. Senate approval of legislation granting a pathway to citizenship.

The new state-by-state analysis from the Institute on Taxation and Economic Policy is based on tallies of increased income, sales, excise and property taxes that undocumented immigrants would pay if they gained legal status. They already pay $10.6 billion annually in taxes to state and local governments.

The analysis assumes newly legalized immigrants would earn higher wages. The biggest tax revenue bump would come from increased income taxes that new citizens would pay, according to the report, which used data from the Pew Hispanic Center to estimate state immigrant populations and family sizes.

The benefits to states would vary greatly. For example, in 2010, undocumented immigrants paid less than $2 million in taxes to Montana and more than $2.2 billion to California.

Illegal immigrant families pay about 6.4 percent on average of their income in state and local taxes, a figure that would increase to 7 percent if they won citizenship.

The non-partisan Congressional Budget Office has reported that enactment of the Senate-passed bill would reduce deficits and curb the flow of illegal immigrants into the country.

The Senate bill won the backing of more than a dozen Republicans and calls for increased U.S.-Mexico border security as well as a path to citizenship for 11 million illegal immigrants. The bill’s passage in the Republican-controlled House is far from certain.

Opponents of granting undocumented immigrants citizenship cite a study by the conservative Heritage Foundation that estimated legalization would cost $6.3 trillion over a half century due to increased use of federal services and benefits.